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TMI Blog2010 (1) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... sales tax as brand name holder under section 5(2) of the Kerala General Sales Tax Act, 1963 (hereinafter called "the Act"). The W.P. (C)s. are filed by the assessee challenging their subsequent assessments as brand name holders under section 5(2) of the Act. We have heard Government Pleader appearing for the State which filed the revision case and advocates Sri K. Srikumar and Sri R. Muralidharan appearing for the assessee. The Government Pleader relied on our recent judgment in S.T. Rev. No. 445 of 2006 and connected cases in the case of State of Kerala v. Oxford Mouldings (P) Ltd., wherein we have reversed order of the very same Tribunal on the very same issue. The Government Pleader submitted that the facts of this case are similar to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Kaveri taking into account all factors including raw material, master batch, packing material, stickers and manufacturing and other overheads as fixed from time to time plus sales tax and excise as applicable. . . . (7) Kaveri shall procure all raw materials, master batch, packing materials, etc., for Nilkamal's production based on Nilkamal's specifications. (8) Any fluctuations in the prices of raw material, master batch, packing material, etc., shall be reflected in the pricing by Kaveri and shall be approved by Nilkamal vide letter orders/amendments to letter orders." It is clear from the above that the manufacturing company with whom the assessee entered into agreement will manufacture moulded furniture depending on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oever. The Government Pleader contended that by virtue of the relationship between the assessee-company and the partnership firm which are owned and managed by the same persons, the assessee also has got the right to produce and market plastic moulded chairs under the brand name Nilkamal. Counsel for the assessee has relied on agreement executed between M/s. Nilkamal Crates and Containers, a partnership firm and the assessee-firm whereunder the assessee was assigned the right to use the brand name by the firm without payment of any royalty. Based on the terms of licence agreement between the firm, namely, Nilkamal Crates and Containers and the assessee, counsel contended that the real proprietor of the brand name is the partnership firm Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay tax. Sub-section (2A) of section 5 provides for a mechanism by which the first seller, if he is not a brand name holder of the goods, is entitled to claim exemption from tax by obtaining a declaration from the purchaser that the purchaser is the brand name holder of the goods liable to pay tax on first sale. However, in this case the manufacturer has not produced any declaration from the purchaser because being an SSI unit, they are otherwise entitled to exemption on the sale of products. The assessee has no case that they are not the brand name holders of the product and their only case is that the original brand name holders, namely, the partnership firm Nilkamal Crates and Containers, granted the assessee licence to use the brand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view, the memorandum of understanding is nothing but an agreement or contract for manufacture and the only difference is that instead of giving manufacturing cost and agreed margin to the manufacturer, the assessee has allowed the manufacturer to fix the price on a rational basis but with provision to give the benefits of price variations in raw materials to the assessee. In our view, the test to be applied for the application of section 5(2) in this case are the following: (1) Whether the manufacturer is the brand name holder? (2) If manufacturer is not the brand name holder, whether the assessee is the brand name holder? (3) Whether assessee's sale can be treated as first sale under section 5(2) of the Act? We have already found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t dated December 6, 2001 between the assessee's sister concern, namely, the partnership firm Nilkamal Crates and Containers and the manufacturing company by which licence is granted and held that the manufacturing company has obtained a licence for manufacture of the product in the brand name Nilkamal. Based on this, the Tribunal has held that the assessee is not the exclusive holder of the brand name in Kerala. In our view, the finding of the Tribunal is against assessee's own case because the memorandum of understanding between the assessee and the manufacturer provides that manufacturer is bound to sell the entire goods produced to the assessee which alone has the right to market plastic moulded chairs made in the brand name Nilk ..... X X X X Extracts X X X X X X X X Extracts X X X X
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